Initial Claims for unemployment insurance rose by 21,000 to 377,000. That s slightly higher than the consensus expectations of a 375,000 level. This is a partial reversal of last week’s massive 50,000 decline, and the big jump the week before that. The extreme volatility in the numbers over the last few weeks is a perfect illustration of why it is a good idea to look at the four week moving average. I strongly suspect that the big moves in the last few weeks probably represented some seasonal adjustment problems more than anything else. The four week moving average fell by 2,500 to 377,500. Over the last year it is down by 50,750, or 11.9%.

There was mixed news on the continuing claims front. Regular continuing claims, those paid for by the states, and which run out after 26 weeks rose by 88,000 to 3.554 million, but are down by 465,000 or 11.6% over the last year. After the regular claims are exhausted, people move over to Federally paid extended claims. Those declined by 146,000 to 3.414 million and are down by 1.205 million or 26.0% over the last year. The total number of people getting unemployment benefits, regardless of who pays, was down by 189,000 to 7.638 million, and is down by 1.773 million or 18.8% over the last year (there are some timing issued between regular and extended claims which is why the totals and the change in the totals don’t exactly match adding together the regular and continuing numbers).

While we don’t want to see initial claims rise, I would not lose a lot of sleep over this number. It looks more like a return to normal after two rather unusual weeks. Now the current week and the four week average are right in line with each other. The 377,000 level is not that bad, especially when you consider that in the Spring of 2009, they were over 650,000, and that except in absolute boom times, initial claims almost never fall below 300,000. Generally 400,000 is considered the inflection point, below which the economy starts to be generating enough new jobs to make a serious dent in unemployment.

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